What’s involved in property inspection reports?

A pre-purchase property inspection is a way of knowing as much as you can about the condition of the property before you purchase it. This is important as it will help you to avoid problems and extra costs down the track.

What are they and why do you need them?

A pre-purchase property report is a building inspection report that is carried out before you buy a property. It is a written report which informs you about the condition of the property. It will inform you of any significant building defects or problems, for example cracking, rising damp and safety hazards.

In NSW, Contracts for Sale are “full disclosure contracts” which means all details about the property should be included in the Contract. However, the Contracts do not contain any pre-purchase reports or pest reports. It is up to the purchaser in NSW to obtain their own pre-purchase building and pest reports.

In the ACT Contracts for Sale must include a pre-purchase building and pest inspection reports. The cost of the reports is initially incurred by the seller and the cost is then adjusted at settlement; so the reports are actually paid for by the buyer.

In Queensland, the Contract allows the buyer time to obtain a property inspection report and pest report. As Queensland has many wooden homes, the incidence of pest infestation is high. It is not unusual for buyers to decide not to purchase a particular property due to an adverse building or pest report. The buyer then does not need to go ahead with the Contract.

In the other states you are well advised to obtain a property inspection report and pest report before entering into a Contract to buy a property. Some states will allow you to make your purchase conditional upon a satisfactory building and pest report. If you don’t obtain a building report and you later find out there are major problems with the property, you have only yourself to blame as the maxim of “buyer beware” applies to property purchases.

It is wise to obtain a pre-purchase building inspection report so that you are aware of any problems in advance. If there are any problems with the property, you will be able to obtain advice about how they will affect the property and the cost of rectification prior to settlement. If you carry out an inspection and defects are listed you may also be able to negotiate a lower price for the property due to the findings.

What can they tell you?

A pre-purchase property inspection will generally include all accessible parts of the property including the interior and exterior of the building, the site and the roof space and roof exterior.

In inspecting the site, items such as the garage, carport and garden sheds will be included along with items such as steps, fencing, surface water drainage, stormwater run-off, paths and driveways.

If there are areas of the property which were not inspected, this will be noted in the report along with the reason why the area was not inspected.

The inspection report will also tell you a summary of the overall condition of the property. The summary will outline the major faults found and the overall condition of the property for its age and type.

A list of any significant problems and if necessary a recommendation that a further report be carried out by a specialist (such as a pest inspector or electrician) will also be included.

What won’t they tell you?

A pre-purchase property inspection will generally not include parts of the property which could not be inspected or minor defects or whether termites or other pests are present. You need to get a pest inspection report to cover pest infestation.

Items which will also not be checked generally include things such as electrical wiring, swimming pools, air conditioning, plumbing, carpet and appliances.

When or why would I want to do further specialised inspections?

A pre-purchase property inspection will usually be limited to a visual inspection only. This means that it may not identify major structural defects or other hidden problems. If you are concerned about other issues you should obtain separate inspections from suitably qualified personnel, such as pest inspectors or structural engineers.

For example, pest inspections are often a separate report to the building report. It is often wise to also invest in a pest inspection as the building report will not look at the existence of pests such as termites.

While the pre-purchase property inspection will identify any significant problems, it will not contain an estimate of repair costs. If any defects and problems are identified, it may be worthwhile obtaining a second report from a specialist to ascertain the cost of repair.